There is the prevalent myth that the best time to join a company is at start-up—the so called ‘ground floor opportunity’—, but if the truth be told, the ground often caves in leaving many people very unhappy.
This does not mean that you should wait for five years to see if a company would do well, because logically, this would mean that no Network Marketing company will ever get started. The point here is that you should assess your risk and know that the chance of losing your money is higher with a new company than with a company having a proven track record.
You know the saying that the proof of the pudding is in the eating; just so the proof of the stability of a Network Marketing company is in the duration of survival. In fact, in over 60 ears of Network Marketing history and after tens of thousands of Network Marketing start up companies, only around 42 companies have made it to their 5th birthday.
Any business owner would admit that the first years are the toughest. This is the period when the company is just establishing a footing and income is most likely low. If the company does not have the proper financial backing it is not likely to survive these years.
You would not want to join a company that is depending too much on the distributors for survival. A Network Marketing company takes time to build momentum by the very nature of the business - word of mouth advertising, people telling people. Before it reaches top momentum it must have the financial backing to survive the early hurdles.
Customer support for the distributors is also a critical part of the company. If their distributors feel neglected then they will simply not stick around. Especially in today’s market where there are thousands of Network Marketing companies beckoning. The distributors are the consumers and salespeople, and to neglect them is to commit certain suicide.
A sad reality of the Network Marketing industry is that there are many scam artists that come along just for the quick cash just before they close shop and disappear. This would require that you do your due diligence such as checking consumer alert websites as FTC.gov and WorldWideScam.com among others. These scam artists will normally emphasize the compensation plan over the actual product—if there really is a product— and apply high pressure sales tactics to persuade you to join the “ground-floor opportunity”. These criminals prey on human greed and have little sympathy for the naïve.
Pick High quality (unique if possible), reasonably priced products or services that should be, ideally, consumable so users will have to
buy over and over again.
Traditionally, Network Marketing companies are able to produce higher quality products simply because they don’t have to pay outrageous prices for advertisement. Just think about the millions of dollar paid per year by companies such as Nike to sports stars for a 30 second commercial. This money, if Nike followed the Network Marketing model, could go into developing better quality products and paying their workers better salaries.
Because a large part of a normal company’s budget goes towards advertising, Network Marketing companies will deliver a higher quality product, all things being equal, per dollar spent.
Also remember that you want to be paid continually so you need a product or service that is consumable so the customer has to keep refilling his supply. Nutritional and telecommunication companies fit this requirement very well.
Apart from being consumable, another important factor is how ‘needed’ this product or service is. The negative side of pushing nutritional products is that most people are only concerned about their health after it is already failing! (You’ll do well recruiting at the local hospital). If you are marketing a service such as web hosting, medical coverage or legal services you are more likely to have less attrition in your down line.
If the company is selling a product that you can pick up at your local department store, then you’re not likely to do very well. A unique or proprietary product will do better since you’ll have less competition—you learn very early that there is no such thing as zero competition although some companies will want to make this claim.
The “acid test” question to apply to the price of the product or service is, “Would I purchase at this price if there wasn’t a compensation plan attached to it?” If your answer is “No,” then you are looking at a potential pyramid scheme where a product is just attached to the compensation plan to make the opportunity appear legitimate. In these cases you will always find that the compensation plan becomes the selling point and the product or service rarely mentioned.
